(Reuters) -Struggling British water utility Thames Water said on Wednesday that the expenditure cuts proposed by the water regulator were not tenable.
In July, Ofwat told water companies they would be allowed to increase average bills by 21% over the next five years, not as much as the companies wanted to tackle sewage spills, fix leaking pipes and increase capacity for a growing population.
The British water utility added that it had significant concerns in wastewater, where Ofwat has halved its proposed enhancement expenditure and set targets that are beyond reach.
Thames Water’s bonds fell after the utility said the proposed expenditure cuts would make its current plan uninvestible.
“This would leave us with a multi-billion pound gap between what we are allowed to charge our customers and what is needed to deliver against the ambitions that customers and stakeholders have set for us,” the company said in a statement.
The utility, which is burdened with debt and risks being nationalised, wanted to hike bills by a total of 191 pounds ($252.25) over five years, but Ofwat said it would allow a rise of 99 pounds.
British water companies’ lobby on Wednesday warned that the industry watchdog’s recent proposals to meet environmental targets within the allowed increase in customer bills could deter investments in the sector.
(Reporting by Prerna Bedi, Yadarisa Shabong and Radhika Anilkumar in Bengaluru; Editing by Vijay Kishore and Mrigank Dhaniwala)
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